Login or Register

Featured Blogger

Red-Hot Thread

"The corporate brand is not only used to improve competitive
positioning and express company aspirations, it can also be a powerful
tool to motivate employees."

Departing Goldman banker slams "rip-off" culture

By Douwe Miedema

(Reuters) - A Goldman Sachs banker added to the firm's scarred public profile in a withering resignation letter published in the New York Times, saying Goldman had become a "toxic and destructive" place where managing directors openly referred to their own clients as "muppets."

It was the latest blow for the storied Wall Street investment bank, which has long supplied senators and cabinet secretaries to Washington but now draws comparisons to a "great vampire squid wrapped around the face of humanity."

In an opinion column for Wednesday's Times, Greg Smith, who worked in equity derivatives, said Goldman had become "as toxic and destructive as I have ever seen it.

"It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets,'" Smith said.

In the United States "muppet" brings to mind lovable puppets like Kermit the Frog, but in Britain, "muppet" is slang for a stupid person.

Goldman Sachs issued a short statement in response:

"We disagree with the views expressed, which we don't think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves."

Calls to Smith, who was a vice president in derivatives sales at the company, were referred to the bank's press office. According to the British Financial Services Authority's register, he joined Goldman's UK unit a year ago.

Johannesburg-born Smith attended universities in his home country and in the United States, where he received a degree from Stanford University.

While at student at Stanford he had a summer internship at Paine Webber in 1999 and a summer internship at Goldman in 2000. Upon graduating from Stanford in 2001, he landed a job at Goldman as a financial stock analyst. He most recently worked a vice president for Goldman Sachs Services Ltd.

Though relatively little is known about Smith otherwise, Business Insider reported that a fellow Stanford graduate who interned under the banker spoke well of him.

"I hold him in very high regard. He took care of us junior guys, gave us great pieces of advice, and in general came across as one of the more personable, friendly, and genuine guys on the floor," the website quoted Aveneesh Singh Saluja as saying.

PAST MEDIA STORMS

Goldman Sachs -- fourth among investment banks last year based on fee-income rankings compiled by Thomson Reuters and Freeman Consulting -- was once described as "a great vampire squid" in Rolling Stone magazine. The reference was to Goldman's the extensive influence in politics and business.

In recent years it has faced a series of high-profile incidents damaging to its image after the near-collapse of the global banking system in 2008.

Earlier this month it was accused of a major conflict of interest for advising El Paso Corp on its sale to Kinder Morgan, while being a significant shareholder in Kinder Morgan.

One of its bankers, Fabrice Tourre -- who referred to himself as "fabulous Fab" in emails -- is still embroiled in legal claims in the United States after allegations that he duped buyers of a complex credit instrument.

And two years ago, Chief Executive Lloyd Blankfein caused a media storm when he said that as a banker he was just "doing God's work," defending high banker pay and the role their institutions play in the economy.

TWITTER IGNITES

As might be expected in the social media era, Smith's resignation letter captured the imagination of Twitter. "Greg Smith" was a worldwide trending topic, meaning it had suddenly spiked in interest, while both that and "Goldman Sachs" were trending in the United States.

Many of the commentators expressed surprise about the allegations in the piece, while others called for Smith to shed light on why he left the bank, or pointed out that he seemed to have been employed in a comparatively junior role.

Some poked fun at Smith's description of how he won a bronze medal for table tennis at the Maccabiah Games in Israel, which he says was one of the proudest moments.

The letter also garnered mention on Facebook, which features pages like "Goldman Sachs Are Financial Terrorists."

As happens on the Internet in cases like this, near-instant parodies of Smith's letter also cropped up. The most popular by far had Darth Vader of "Star Wars" fame resigning from the Empire.

"To put the problem in the simplest terms, throttling people with your mind continues to be sidelined in the way the firm -operates and thinks about making people dead," the film franchise's dark lord wrote.

The letter came out just one day after Goldman named former Clinton and Obama administration official Jake Siewert as its new top spokesman.

-

(Additional reporting by Kirstin Ridley in London and Matthew Goldstein and Katya Wachtel in New York, writing by Douwe Miedema in London and Ben Berkowitz in Boston; Editing by Andrew Callus and Alexander Smith)